Outsourcing Finance & Accounting Services means outsourcing one of the most crucial parts of your business. So, should a company outsource its significant functions by trusting external resources?
Outsourcing refers to the process of hiring individuals or agencies to support you with various services and business operations. It may include IT & Technology, Administrative, Ecommerce, Manufacturing, Finance, Consultancy, Marketing, and numerous other services.
Although it is considered a strategy opted by large corporations to save money, it is also a feasible mode of operating for small businesses. Small businesses or start-ups, having limited budgets, can choose outsourcing services instead of setting up a whole department on their own.
Especially when it comes to outsourcing Finance & Accounting Services, one can not risk hiring inexperienced employees at lower salaries. So, what exactly can you outsource?
Finance & Accounting Services to Outsource
Even outsourcing doesn’t include outsourcing a full-fledged team, one must only stick to the absolutely necessary services. Therefore, the first step is to figure out what services are required by your firm. Some of the examples are mentioned below.
Bookkeeping
Bookkeeping being a significant part of businesses includes recording day-to-day transactions in a systematic manner. It involves lots of tasks like maintaining daily transactions in the books of record, carrying out bank reconciliations, processing payroll and maintaining employee records, and preparing financial statements.
Why is it important?
It helps in determining the business profit and losses to calculate the company income, Moreover, it helps in keeping a record of transactions which comes in handy during the tax season.
Benefits of outsourcing bookkeeping:
The bookkeeping experts must be well aware of the software applications. Therefore, the experts who provide bookkeeping services work on updated versions of such software as they serve various clients and stay updated with their usage.
Cost Accounting
Cost Accounting is important for businesses to ascertain their manufacturing costs in a detailed manner. It involves lots of activities like activity-based cost analysis, break-even analysis, budgeting, cost control, variance analysis, and so on.
Why is it important?
There are different costs that occur in businesses including fixed, variable, and semi-variable costs. It’s important to determine each cost as by maintaining these costs, companies can increase profits.
Benefits of outsourcing cost accounting:
Outsourcing experts do not just bring area-specific knowledge but industry-specific knowledge as well. It is possible that the experts who have been outsourced are providing services to large-sized companies and can help you with making better decisions for your business growth.
Tax Services
Tax preparation includes various compliances related to Federal, State, or Local Tax Returns. It varies depending on the country and region in which the business is established. However, what stays the same is the need of filing tax forms and returns in order to get a green flag from the tax authorities.
Why is it important?
Tax experts have a better understanding of the tax deductions and ways in which you can pay the minimum taxes. Paying unnecessary taxes and higher amounts only makes your growth slower. Moreover, doing taxes on your own can be a time-consuming task and might make you miss out on important deadlines.
Benefits of Outsourcing Taxation Services:
For country-specific taxes, it is suggested to hire local tax experts overseas to save money and to have a deeper understanding of the concepts. This can also allow you to have contacts in different countries which can smoothen the process of business expansion.
Financial Analysis
Along with bookkeeping and accounting, financial analysis services can also help you in making strategic judgments for your business. Assessing the financial health of your company can allow you to generate higher income and make better decisions. There are various types of financial analysis Horizontal, vertical, ratio, trend, liquidity, and profitability analysis.
Why is it important?
Where cost accounting makes it easier to take inbound operations to the next level, Financial Analysis helps in taking the external approach. It helps in issuing financial statements to external parties and stakeholders such as investors, financial institutions, and so on.
Benefits of outsourcing financial analysis:
The financial analysis makes it easier to predict a company’s future and to take calculated steps. The Financial Analyst experts do not just go through case studies but have experience working with numerous clients, making them vigilant in advising better business plans
Payroll Services
Payroll services involve the recording of all the payments made to employees from their employers. It included salaries, bonuses, work benefits, and other paychecks. For small-sized businesses, it may not be a hectic process but with time and increasing team size, hiring payroll services can help benefit you.
Why is it important?
Every company must have proper calculations of payments and compensations and they should be accurate as well. Setting the right value for an employee’s pay can also help in retaining that employee for a long.
Benefits of outsourcing Payroll services:
The standard of living as well as the pay scale can differ from country to country and state to state. This can lead to pay scale discrepancies and affect the business in the long run. Hiring a payroll expert can not only eliminate this issue but also assist you with the filing of payroll taxes and forms as per the requirements.
Finally…
There are various accounting and finance services that can be outsourced. These are mainly beneficial for companies that are not into the finance industry themselves as they can focus on their core processes.
However, even the Financial and Accounting Service providers hire outsourced accounting services to assist them in serving their clients. This happens usually during the busy seasons as hiring a full-time employee is not their requirement.
Now that you know some of the financial and accounting services that can be outsourced, why not also learn when and why you should outsource your accounting?
Written by- Priyanka Rampal
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